Mario Draghi
Photographer: Alessia Pierdomenico / Bloomberg
Photographer: Alessia Pierdomenico / Bloomberg
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Italy’s debt this year will surpass the country’s previous record after World War I, showing the debilitating cost of the coronavirus pandemic on euro areathe third largest economy.
The new number of loans of 159.8% of the gross domestic product presented in a fiscal perspective ratified on Thursday by the cabinet of Prime Minister Mario Draghi. This exceeds the historical maximum probability of 159.5% achieved in 1920, shortly before the era of the fascist dictatorship of Benito Mussolini.
Record Burden
Italy’s debt will rise to the highest level ever
Source: Bloomberg News and the government plan
The economic update also confirms a growth forecast of less than 4.1% this year, with a target of 4.5% once the stimulus and other measures are taken into account, according to a government official. A budget deficit of 11.8% is anticipated, increasing loans by another billion euros to protect citizens and businesses from the impact of the pandemic.
The figures represent the first complete set of compiled economic forecasts since Draghi took over Italy’s response to the coronavirus, which killed more than 115,000 and led to blockades that destroyed key sectors such as tourism. The government has agreed to borrow 40 billion euros ($ 48 billion) for new stimulus measures, pushing its global pandemic spending so far to more than 170 billion euros.
Read more: Draghi rushes through loan plans Up to $ 48 billion More
For the time being, Italy’s spending is borne by the European Central Bank, which buys government bonds to keep spreads between countries under control and to make pandemic debt considerably less expensive.
Given that austerity is far removed to allow the government to focus on rebuilding the economy, the return to growth fueled by national and European stimulus measures should help support Italy’s finances from next year.
The deficit is reduced to 5.9% of GDP, while debt is expected to fall to 156.3% of output in 2022, according to forecasts. The government does not intend to have a deficit yield below 3% of production by 2025, according to a project seen by Bloomberg. Debt is expected to return to pre-crisis levels of 134.6% by the end of the decade.
In recent days, restaurateurs and other business owners have clashed with police in Rome amid protests calling for easing conditions and more economic support. Elsewhere, protesters blocked highways while campaigning for a faster reopening of the country.
The government has signaled that it could start easing some measures as early as the end of this month, prioritizing outdoor activities.
Push vaccination
Draghi has increased pressure on regional governments to speed up their vaccination efforts, especially by focusing on older citizens. But his government is struggling to reach a target of 500,000 shots a day by the end of the month.
According to other EU countries, Italy retains the doses of vaccine produced by Johnson & Johnson and faced cancellations by those scheduled to receive Astra Zeneca Plc fired in the middle of reports of rare cases of blood clots.
Health Minister Roberto Speranza told lawmakers that the AstraZeneca vaccine is effective and safe, as are all other vaccines currently used in Europe. Commenting on the Johnson & Johnson vaccine review, he said: “Ours the hope is that there may soon be elements of clarity that allow us to start using a vaccine that will be important to our campaign. ”
– With the assistance of John Follain, Giovanni Salzano and Zoe Schneeweiss
(Updates with end-of-decade perspectives in the seventh paragraph)